NEWSLETTER-2019-metin

15 COMMERCIAL LAW Delegation of Representation Authority In accordance with Article 370/2 of the TCC, a company’s board of directors may delegate its representation authority to one or more executive directors, or to third parties, as managers. In the latter case, it is stipulated that at least one member of the board shall have repre- sentation authority. Conditions In contrast to the former Commercial Code, delegation of rep- resentation and management authorities is regulated under different articles. Therefore, the doctrine is controversial as to whether the con- ditions in Article 367 that govern the delegation of management apply to the delegation of representation authority. The dominant opinion defends that these conditions apply to both cases 2 . Accordingly, it is necessary for the lawful delegation of represen- tation authority that: • The articles of association includes a provision that permits the delegation of representation authority; • The board of directors prepares an internal directive; and • The board of directors makes a delegation decision. There are a number of issues to be considered in order to meet these requirements. For example, the persons to whom representation authority will be delegated cannot be determined in the articles of as- sociation, or limitations cannot be made on the qualifications of these persons, and the appointment of the persons to whom the authority will be delegated cannot be subject to the approval of the general as- sembly. Another situation constitutes transfer of the board’s authority to determine the organization of management, which is among the in- alienable duties as per Article 375 of the TCC, to the general assembly, and is void. The articles of association with such provisions cannot be registered with the trade registry and, even if it is, it does not create a positive effect of registration 3 . 2 Cenkci , p. 51. 3 Cenkci , p. 56-57.